Greensboro businesses may decide that participating in a merger or acquisition makes good business sense. Whether it is taking advantage of market synergies or simply filling a gap in core competencies, mergers or acquisitions can be a good idea. There may be some legal formalities that must be attended to, however, before a merger or acquisition can be executed. This blog post will briefly discuss one of these possible formalities: compliance with antitrust law.
The first thing that should be done in the antitrust area is determining the market share of each company participating in the merger or acquisition. Often, business law attorneys can do this computation without special assistance. Sometimes, however, it may be necessary to use the services of an economist to get an accurate figure.
Once a letter of intent is signed, a formal legal opinion will be sought on the antitrust and other legal aspects of the transaction. At this point, the legal team will need access to a great deal of company information. The legal team will probably provide the management team with a checklist of needed information. Business law attorneys are usually happy to provide an explanation if management wants to know why certain items of information are needed.
If companies don’t pay attention to the antitrust aspects of a transaction, the costs could be severe. The government has the power to block certain kinds of transactions from occurring. Depending on the circumstances, the government could also move to get an order of divestiture or even an order preventing a company from making any other acquisition in the industry for 10 years without prior approval. Further, if a private party proves it suffered injury from an illegal merger or acquisition, it could be entitled to damages equaling three times the amount of the financial injury it actually suffered.